Productivity and tourism

The aim of the report was to examine some of the issues around productivity levels of the tourism and hospitality industry in Scotland.

The methodology consisted of a review of existing literature and data, which focused on how staff within the industry are deployed; how levels of investment and innovation impact on levels of productivity; and the business view on current productivity levels within the industry.

Overall, the report concluded that productivity should be a higher priority for tourism and hospitality businesses and supporting agencies. It was noted that the sector has focused on increasing sales and customer service, and less attention has been paid to how efficiently these services are delivered. Within the industry, labour productivity was found to be low but comparable with other labour intensive service activities such as cleaning, retail and care. Accommodation and food and drink services were identified as the largest elements of the hospitality and tourism sector, with productivity in accommodation higher than in food and drink services. The report highlighted Office for National Statistics (ONS) data which indicates that while GVA and employment in the accommodation and food and drink services has grown, labour productivity in the sector has not improved significantly in real terms over the last 20 years. The report found that productivity in the core parts of the tourism and hospitality sector in Scotland was similar to the rest of the UK outside London, and that compared with other EU countries, productivity in the UK is similar to Germany and the Netherlands but well behind France, Denmark, Norway, Belgium and Austria. Differences in productivity across local authorities in Scotland were also found, with average GVA per employee ranging from £25,700 in the north east, £20,200 in Edinburgh, £15,200 in Glasgow and £13,800 in Dumfries and Galloway. GVA per industry worker in Scotland was identified as being £16,832 in 2013 compared with £45,752 in food and drink, £59,596 in life sciences and £58,968 in creative industries in the same year; however it was also noted that GVA per worker in the tourism sector grew from £13,974 in 2008 (20%).The report identified the key influences on productivity as: volume of sales; leadership and management; balance of skills; increasing and improving the use of technology/innovation; and investment.

The report recommended the following actions to improve productivity within the sector: making more use of the experience of longer term staff; using IT to monitor demand and plan rotas more effectively; using changes in wages to redesign jobs to minimise downtime; identifying times or areas of business that are underutilised; using feedback to focus on what customers want; identifying opportunities to work as part of the “destination”; using benchmarks to better manage margins and analyse performance; and encouraging staff to look for ways to work more productively. It was also suggested that activity to support productivity should focus on the following three areas: leadership and management skills; better/more use of ICT; and better/more use of data and analysis. It was also recommended that these actions should focus on smaller businesses, for example those with around 10 to 20 employees.